Cryptocurrency value spikes in past year, continues to rise
2017 has been quite the year for the cryptocurrency market. Bitcoin, the most popular currency in the sector, is up roughly 400 percent just this year.
Cryptocurrency is purely defined as a digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds, operating independently as a central bank.
“I used bitcoin to buy a fake ID twice,” said a student that spoke on the condition of anonymity.
Other students at the university are playing the market like a game and turning a profit.
Third-year economics major Laith Shehadeh started his own company this June with another UC student. It is essentially a cryptocurrency trading firm.
Bitfund Ltd. is a diversified cryptocurrency investment made for the future, according to their website.
“There was a really big bull run back in June; a lot of currencies hit all-time highs,” Shehadeh said. “I made a lot of money off Ethereum.”
Bitcoin’s arguable biggest rival, Ethereum, is up more than 4000 percent this year.
The price of bitcoin broke $4,000 this month, and the market value of the currency is roughly $72 billion. Ethereum is worth about $32 billion.
Shehadeh saw an opportunity to leverage his knowledge of the markets to increase his liquidity.
“If I’m good at doing this, I can make myself and other people money,” he said. “I do a lot of research everyday.”
Bitcoin isn’t close to being widely accepted, but its massive gains this year caught the eye of traditional investors. An exchange named LedgerX received approval from the Commodities Futures Trading Commision to start clearing bitcoin options, making it the first U.S.-federally-regulated platform of its kind.
The future of cryptocurrency is largely unknown, and immense competition will most likely leave several digital platforms behind.
“A lot of currencies are going to be shafted in the future,” Shehadeh said.
The potential for the market is broad though, and many firms are beginning to experiment.
The Chicago Board Options Exchange is working towards creating their own bitcoin-derivatives listing. Several groups are looking to establish a bitcoin exchange traded fund, pending approval from the Securities and Exchange Commission.
The U.S. government has not taken any steps to regulate bitcoin or any other digital currency, but their involvement is critical to cryptocurrency’s immersion into modern day commerce. As of now, peer-to-peer transactions are driving expansion.
“The federal government is the largest variable in cryptocurrency’s long-term growth,” Shehadeh said.
Early Snapchat investor Jeremy Liew thinks bitcoin will reach $500,000 by 2030. Popular computer programmer John McAfee thinks it will only take three years to reach that figure.
Shehadeh strictly trades, but he has used bitcoin a few times to consume.
“I bet on the most recent McGregor fight; I lost $400. I was very confident,” Shehadeh said.